Credit deflation and the reflation cycle to come (part 9)

[Jesus Wept]

13 minutes ago, Harley said:

Whoops!  

But a tidy bit of reflexion and a very valid hypothesis.  If so, we may get the bull trap first?  That's the one that got them jumping out of windows in 1929!

 

22 minutes ago, Jesus Wept said:

 

2025 will (edited to say -  “probably” !) see the main capitulation.  
 

Fixed that. Very presumptuous of me, 

Edited April 20 by Jesus Wept

[Harley]

32 minutes ago, Jesus Wept said:

2025 will (edited to say -  “probably” !) see the main capitulation

You do yourself a disservice!  Technically, it indeed "will", if the hypothesis is correct!!!! .  It may seem I'm talking semantics but IMO only at a superficial level!

Edited April 20 by Harley

[Jesus Wept]

2 minutes ago, Harley said:

You do yourself a disservice!  Technically, it indeed "will", if the hypothesis is correct!!!! 

I’d also say we are in the “DENIAL” phase - and will likely see what everyone thinks is a “RETURN TO NORMAL” around the time of the US election where we have a period of gains and the Nasdaq getting back a thousand or two points.

I wonder how / will the market react differently to a Biden / democrat win OR a Trump win? 
 

 

[Harley]

2 hours ago, Jesus Wept said:

I’d also say we are in the “DENIAL” phase - and will likely see what everyone thinks is a “RETURN TO NORMAL” around the time of the US election where we have a period of gains and the Nasdaq getting back a thousand or two points.

I wonder how / will the market react differently to a Biden / democrat win OR a Trump win? 
 

 

Yes, allied to that people seek/need clarity and decisiveness (not a grind) but as with the opposing tactics (strategies?) in the Ukraine......er....!

Edited April 20 by Harley

[Ma2]

I don’t get back on the thread as much these days as I find it quite depressing sometimes!
But for me the thread was about what DB thought was coming and how we could try to stay ahead. 
Investing was part of this for sure and I’ve learnt a lot but for me the best thing has been having my eyes opened to how the world works. Sure it’s depressing sometimes, but organisms that survive are the ones that adapt to their environment. How to adapt if you don’t even understand the environment you’re in? Most people don’t understand, or it’s too painful for them (I have tried but people don’t want doom, and they can’t seem to see a way out like we can for some reason)
So for me investments have been secondary to other ideas, e.g. understanding that fuel prices and interest rates were going up. 
While everyone else I know was shitting themselves over their mortgage and fuel costs I was and still am very relaxed with a 10 year mortgage at 2% with no early penalty after 5 years, my energy fixed for 4 years, enough coal, wood and gas bottles for a few years beyond that. Plus got Solar, got a greenhouse and started growing veg. Moved somewhere in the UK with parallel systems. 
Sure In future I’d like my telecoms shares paying my broadband, my energy shares paying my fuel costs, my potash shares paying my food bill etc. But if all my savings and investments go to zero then I will still have so much to thank DB and this thread for. 

 

Edited April 20 by Ma2

[DurhamBorn]

3 hours ago, Jesus Wept said:

The Nasdaq composite is down 7.6% from its recent ALL TIME HIGH of 16538 pts

It currently stands at 15282 pts - 7.6% 

 

The S&P is down - 5.6 % since its ATH

(-4.6% in the last month).

Has the crash started?

What is the definition  of a crash? 

How long will it last weeks/months/years ? 

Will the contagion spread to other equities in the DOW, FTSE, STOXX, EMs and gold, oil and commodities? 

 

 

 

 

Whats the outperformance in SEDY over the S&P in the last month?.8.5%.Please dont anyone shoot me down.As the famous Club 18 to 30 advert said back in the day of course "One swallow doesnt make a summer" but just saying.

 

[goldbug9999]

4 hours ago, Jesus Wept said:

The Nasdaq composite is down 7.6% from its recent ALL TIME HIGH of 16538 pts

It currently stands at 15282 pts - 7.6% 

 

The S&P is down - 5.6 % since its ATH

(-4.6% in the last month).

Has the crash started?

What is the definition  of a crash? 

How long will it last weeks/months/years ? 

Will the contagion spread to other equities in the DOW, FTSE, STOXX, EMs and gold, oil and commodities? 

 

 

 

 

I think markets are going to be jittery until the yids and rag heads have finished bombing each other, or until everyone is bored of hearing about it (as they are now with russ/ukr). Not personally convinced this is the start of a significant BK but am positioned to be able to do some bargain hunting if that turns out to be the case being i'm about 33/33/33 cash gold stocks (figures excluding my bitcoin which is nearly all house money ...). 

Also I think being a long term bitcoin holder has skewed my perception of volatility - bitcoin frequently moves more than 7% in a day, not sure whether this is a good or a bad thing (my perception that is ...)... My own takeway is that if your going to make life changing gains you have to make long term high conviction bets and be prepared to ride short term volatility. 

Edited April 20 by goldbug9999

[Mandalorian]

8 hours ago, Lightscribe said:

I don’t know, I miss Stuey. Doesn’t feel quite the same without his ramblings of slashed yields, interest rates cut to zero and property prices to the moooon. 

I think Mandalorian should stick around to see  how much US passives that are weighted in tech sell off in the forthcoming shitshow.

 

Again.

I don't care if they do.  My whole point is with the 80% of my money that is the 'serious' pot, I don't think about what may/may not happen.  The market does all my thinking for me for 80% of the value of my shares.

[Mandalorian]

5 hours ago, BurntBread said:

I don't think that is true really. For example @Frank Hovis, @WICAO, @Harley and @nirvana all have approaches to investing that differ radically from the main thread ideas (and two of them have views quite similar to yours, I believ). They are all regular(ish) and welcome contributors, and nobody else kicks up a fuss about being presented with contrary views.

I'm not saying you aren't welcome, but I think what I don't so much appreciate, is someone trying to take over the thread with lots and lots of posts, most of which are loudly telling other people what to do, rather than just talking about what the poster, himself, does.

Stuey was a bit like that when he joined the thread, telling everybody that it was much better to bet on football results, rather than this stock market malarkey. However, he did settle down once he had basked for a while in the attention he wanted.

I'm not telling anyone one what to do.  As  I've said a number times.

I'm just trying to put the opposite point across.  Which some people don't much care for.  Well that's their problem.

[nirvana]

3 hours ago, baffledbyzirp said:

The sun is shining in North Yorkshire and not a cloud to be seen!

ace post brother....shame I'm not still in North Yorkshire, we coulda gone out for a bike ride 

[Mandalorian]

5 hours ago, Jesus Wept said:

I like @Mandalorian and his posts. 

Even though I have the total opposite view to him regarding my position of staying out of the market in cash for now - or his “staying fully invested and adding monthly”.

I propose building cash and going back in when the “conditions / path ahead becomes clearer”.

However his points on dividends and global trackers and cost averaging and staying 90% away from individual shares are probably all things I will take on board. 

What I would like him to do is start picking shares / funds that do 600% in 2 years - but not everyone can do that ! 

If only I knew 4 years ago what I know now ….! The knowledge gain from here has been exceptional. 

 

An unrealistic approach without increasing risk, and in any case impossible to be consistently correct year after year.  My whole point is that the market return is a sufficient return to grow your purchasing power.

Edited April 20 by Mandalorian

[nirvana]

1 hour ago, goldbug9999 said:

My own takeway is that if your going to make life changing gains

you only do that by getting off the hamster wheel.......which you can't do once you start a family......

my upper middle class neighbors have been mowing their masoof lawns all morning.....fat useless cunts

i've been cycling, life changing......especially when I skin those arrogant young french cunts on their 3k+ carbon things, telling me to hurry up 

Disclaimer: spend some money on an ebike or 2, vroom vroom 

[Harley]

2 hours ago, DurhamBorn said:

Whats the outperformance in SEDY over the S&P in the last month?.8.5%.Please dont anyone shoot me down.As the famous Club 18 to 30 advert said back in the day of course "One swallow doesnt make a summer" but just saying.

 

Ah, the wonders of JustETF to help clarify things!  These are the analyses I do (here I have created a 50:50 portfolio).  This is not a rebuttal.  To me it just highlights what you're best/comfortable with (e.g. timing versus passive, preferred reward:risk (vol), believe in the continuation of the relative (improving SEDY) trend, etc).  Yes, these are total returns (i.e. divs included).

For us, we've decided to move to broader ETFs (either one global ETF with its default Developed:Emerging market split or one Developed and one Emerging ETF with our preferred split) and limited timing over the intermediate term (so within a range of say 2% to 5% allocation per ETF).  Probably several such ETFs to mitigate some counterparty, etc risks.  We'll save our more aggressive timing (and hopeful alpha!) to our trading account.

PS:  FYI, this is the sort of thing we're more interested in atm for non-trading portfolios (25% equity, 25% gold, 50% cash):

Far lower risk(vol) with a proportionate lower reduction in reward and an overall reward:risk we would be more comfortable with longer term.  Then we try and juice this (but also accounting for the additional effort) with say commodities rather than just gold, some bonds (e.g. corporates) rather than all cash, Developed:Emerging ETFs using our preferred split, a limited amount of timing in and out of max positions, etc. 

PPS:  I've excluded aggregate (all type, all world, all currency) bonds because they were such an monumental recent shiteshow they have demolished the metrics for every period we can look at!  The profound impact of their "crash" was perhaps our largest shock.

Edited April 20 by Harley

[Long time lurking]

Is this the result of Black Rocks going direct advice ?

Now they are taking back what they put in ,just look at google etc 

Edited April 20 by Long time lurking

[Harley]

34 minutes ago, Long time lurking said:

Is this the result of Black Rocks going direct advice ?

Now they are taking back what they put in ,just look at google etc 

Kobeissi was on Thoughtful Money recently.  Impressive.

Edited April 20 by Harley

[JMD]

1 hour ago, Harley said:

Kobeissi was on Thoughtful Money recently.  Impressive.

Can't remember which site does generates that stock chart 'heat map thingy'... is it Trading View or is it a free site?

[DurhamBorn]

2 hours ago, Long time lurking said:

Is this the result of Black Rocks going direct advice ?

Now they are taking back what they put in ,just look at google etc 

In a year or so they will be down 50%+ from highs.Those buying wont even have a divi,just a permanent loss of capital.I repeat the market is giving a value on Nvidia that says free cash will reach $200 billion PA.If they even reach $100 billion (very very very unlikely) the stock will be cut in half.

Stocks like Nvidia need to invest massive amounts into research etc, so even if they execute to perfection lots of free cash will go on new machines,new tech,etc etc.No thanks.I prefer companies on PEs below 10 who can use the same machines from 40 years ago and convert 85%+ profits to free cash.

The sort of bubble companies are great for society,great for early investors,but terrible when nearly everyone owns them already.

A friend of mine ex Mortgage broker has just retired.He has put 50% of his pension in Apple.You heard that right.His plan is to sell 6% a year.He says Apple will double his money even after taking that 6% over his retirement.

[Long time lurking]

26 minutes ago, DurhamBorn said:

In a year or so they will be down 50%+ from highs.Those buying wont even have a divi,just a permanent loss of capital.I repeat the market is giving a value on Nvidia that says free cash will reach $200 billion PA.If they even reach $100 billion (very very very unlikely) the stock will be cut in half.

Stocks like Nvidia need to invest massive amounts into research etc, so even if they execute to perfection lots of free cash will go on new machines,new tech,etc etc.No thanks.I prefer companies on PEs below 10 who can use the same machines from 40 years ago and convert 85%+ profits to free cash.

The sort of bubble companies are great for society,great for early investors,but terrible when nearly everyone owns them already.

A friend of mine ex Mortgage broker has just retired.He has put 50% of his pension in Apple.You heard that right.His plan is to sell 6% a year.He says Apple will double his money even after taking that 6% over his retirement.

IMO this has nothing to do with technicals and all to do with the FED withdrawing it`s going direct support 

They all started the rise and fall almost simultaneously ,it`s more than market conditions that`s driving this  

[Democorruptcy]

1 hour ago, JMD said:

Can't remember which site does generates that stock chart 'heat map thingy'... is it Trading View or is it a free site?

Which heat map? FTSE or US?

HL does daily UK heatmaps 100, 250 etc (Look at the Performance tab on those to see longer term)

Finviz does US stuff Futures, Share map, Groups by sector etc

 

[JMD]

19 minutes ago, Democorruptcy said:

Which heat map? FTSE or US?

HL does daily UK heatmaps 100, 250 etc (Look at the Performance tab on those to see longer term)

Finviz does US stuff Futures, Share map, Groups by sector etc

 

The Finviz US heat map was the one I was asking about. Many thanks Democorruptcy.

[Harley]

2 hours ago, JMD said:

Can't remember which site does generates that stock chart 'heat map thingy'... is it Trading View or is it a free site?

Answered.

Edited April 20 by Harley

[BurntBread]

4 hours ago, Harley said:

Far lower risk(vol) with a proportionate lower reduction in reward and an overall reward:risk we would be more comfortable with longer term. 

[...]

PPS:  I've excluded aggregate (all type, all world, all currency) bonds because they were such an monumental recent shiteshow they have demolished the metrics for every period we can look at!  The profound impact of their "crash" was perhaps our largest shock.

Thank you for those volatility/reward plots. That looks like a very useful tool!

However, what stood out to me was the conjunction of these two quotes. I think they illustrate how risk is a MUCH broader concept than volatility, and that they really need to be considered separately, with the former requiring definitional work by each individual.

[Chewing Grass]

I have forgotten all about the Hyundai Tucson Shitbox Index, so from last April.

to

 

there is no change but it has been around a bit now.

[Harley]

4 hours ago, Long time lurking said:

IMO this has nothing to do with technicals and all to do with the FED withdrawing it`s going direct support 

They all started the rise and fall almost simultaneously ,it`s more than market conditions that`s driving this  

I think the way a recent poster summarised how we're relatively quickly going through a banquet of bubbles (like mag 7) smells very much of the end of days, at least the current ones.  You see similar "frenzies" in nature, in machines, and so on, before the end.  To repeat a phrase - "tail end stuff"!  There will be a move back towards the mean.  In what form and the look of this new mean.....!  For now I'm content to know where we are and to act accordingly.

Edited April 20 by Harley

[Harley]

25 minutes ago, BurntBread said:

Thank you for those volatility/reward plots. That looks like a very useful tool!

However, what stood out to me was the conjunction of these two quotes. I think they illustrate how risk is a MUCH broader concept than volatility, and that they really need to be considered separately, with the former requiring definitional work by each individual.

Indeed, it's a great tool as a starting point and reference point when undertaking further work.  And indeed, risk is a huge and broad topic.  This is just one aspect, but a critical one.  As an aside, it's worth understanding the JustETF definition/calculation of vol.  Works extremely well for me for this particular purpose/exam question. 

But please do talk some more about the breadth of "risk".  To help frame that, here are two global market equity ETFs being considered as part of a traditional four class allocation model:

SWDA

1 year return:risk - 1.54

3 year return:risk - 0.60

5 year return:risk - 0.63

SWLD

1 year return:risk - 1.56

3 year return:risk - 0.61

5 year return:risk - 0.64

What other aspects of risk should be considered in comparing them and what other aspects of risk should be considered in addition to this analysis (primer:  arguably homoscedasticity, heteroscedasticity, and the "portfolio effect")?

Edited April 20 by Harley